Bigger fuel tax cut… Diesel 10%→25%, gasoline 7%→15%

The government will roll out additional measures to stabilize livelihoods, including expanding fuel tax cuts, to cushion the inflationary shock stemming from the Middle East war.

The fuel tax cut rates currently applied—7% for gasoline and 10% for diesel—will be expanded to 15% and 25%, respectively, starting on the 27th. As a result, the fuel tax per liter will fall by 65 won for gasoline, from 763 won to 698 won, and by 87 won for diesel, from 523 won to 436 won.

The end date of the fuel tax cut measure will also be extended from April to the end of May. The expanded cut rates take effect on the 1st of next month, but will be applied retroactively from the 27th of this month.

Koo Yun-cheol, Deputy Prime Minister and Minister of Economy and Finance, explained at a joint inter-ministerial briefing held at the Government Complex Seoul on the 26th that diesel is "the most essential fuel for industry, logistics and the livelihoods of ordinary people," describing why the diesel cut was set larger. He added, "If the situation worsens, we plan to make additional (cuts) by looking at international oil prices and the war situation."

The government finalized the measures at an emergency economic review meeting chaired by President Lee Jae-myung on the day.

In addition, to respond to rising urea prices, the government will implement a notice from the 27th banning hoarding and price-gouging of diesel exhaust fluid (urea solution) and raw-material urea. Under the measure, importers, manufacturers and sellers will be punished if they store excessive volumes compared with normal years for more than seven days or refrain from selling.

Violations may draw corrective orders as well as up to three years in prison or a fine of up to 100 million won, and related goods may also be confiscated or subject to additional collection. The government plans to operate a reporting center and step up enforcement through a joint inspection team with relevant agencies.

To ease the burden on the transport sector, highway tolls for commercial cargo trucks and route buses will also be waived for one month.

The list of items subject to price management will be expanded from 23 to 43. Newly included categories include manufactured goods and processed foods, greenhouse crops, parcel delivery fees and dining-out services.

In addition, central government public utility fees will be frozen in the first half, and local public utility fees will also be managed on the principle of a freeze.

The government plans to check supply-and-demand conditions for key items under a joint inter-agency crisis response task force headed by Deputy Prime Minister Koo, and to devise additional measures through daily situation meetings.

Shin Hyun-bo, Hankyung.com reporter greaterfool@hankyung.com